Michigan health insurance to rise 6.5% in 2016, a smaller hike than for 2015
Lansing — Michigan consumers will pay an average 6.5 percent more for health insurance in 2016, which is less than the rate hike they paid during the past year, state officials said Tuesday.
State officials and industry leaders called the increases modest compared with an 8 percent rise in 2015, but some health care advocates said too little information is available about how rates are calculated for consumers to judge whether the hikes are warranted.
The 2016 rate increases approved by the Michigan Department of Insurance and Financial Services are lower than those in several other states for federally required health insurance under the 2010 federal law, state officials noted.
The average approved rate changes on a premium weighted basis increased 6.5 percent for the 560,357 consumers in the individual market and 1 percent for the 345,077 consumers in the small group or small business market.
“Many states are reporting rate increases well in excess of 10 percent which is significantly higher than the rate of health care inflation,” Department of Insurance and Financial Services Director Patrick McPharlin said in a Tuesday statement. “We are pleased that Michigan consumers are seeing more modest increases.”
Josh Fangmeier, senior policy analyst with the University of Michigan’s Center for Heathcare Research and Transformation, noted that some insurance companies asked for minimal rate increases, or even decreased their rates. But consumers in some parts of the state have few plans to choose from.
“Not all of these insurers are statewide, so ... it’s important to keep in mind that consumer experiences will vary depending on where you live,” Fangmeier said.
In 2015, the average increase was 8 percent in the individual market and 5.7 percent in the small group market, DIFS spokeswoman Andrea Miller said Tuesday. The rate changes for 2014 were not estimated because of essential health benefits and other requirements of the federal Affordable Care Act that took effect that year.
A Michigan health insurance industry official said in June the possible loss of federal insurance subsidies through a U.S. Supreme Court case was in part to blame for the proposed rate hikes. But the court later that month kept the Affordable Care Act subsidies in place and decided they were constitutional in a 6-3 ruling.
Rick Murdock, executive director of the Michigan Association of Health Plans, noted this is the industry’s third year of business in the health care marketplace created by the federal Affordable Care Act.
“Year one was sort of pricing it blind; year two, which was last year, there were significant adjustments — double-digit reductions for some, and double-digit increases for others, as they were trying to get to the middle,” Murdock said. “This year everyone seems to have made a modest adjustment based on what’s going on in health care.”
The rate hikes proposed by insurance companies were reviewed by state officials, who determined they are actuarially appropriate and comply with state and federal laws. But Ryan Sullivan, policy director for Michigan Consumers for Healthcare, said state regulators don’t provide information about the process that consumers can understand.
“We really don’t know how to put (the rate increases) into context because of a lot of lagging transparency in the process,” Sullivan said Tuesday. “What consumers can access via the web and by calling the department is pretty slim pickings.”
The state defended its practices. Miller said consumers can access rate increase filings and other detailed information through the department’s website at http://www.michigan.gov/difs.
“We’re trying to be as transparent as we possibly can be,” she said.
The state’s dominant insurer — Blue Cross Blue Shield of Michigan — will apply a double-digit increase of 11.4 percent. Its health maintenance organization, Blue Care Network, plans to hike its rates 9.7 percent.
In June, a Blues official said an increase in prescription and specialty drug costs is behind the rate hike. Blue Cross had 138,169 people sign up for individual plans in 2015, while another 171,831 people with individual Blue Care Network policies will see average increases of 9.7 percent.
Blues spokeswoman Helen Stojik noted their small group customers will benefit from a downward rate adjustment. Rates for employers renewing coverage in the third and fourth quarters of 2015 will be, on average, 3.3 percent lower for Blues customers and 0.8 percent higher for Blue Care Network customers.
“In addition, 2016 rate changes look extremely favorable, with Blue Cross annual rate changes projected 2.2 percent lower and Blue Care Network projected at 4.8 percent lower than the previous year,” Stojik said Tuesday.
But the Blues didn’t register the largest rate increases. Those belonged to Healthplus of Michigan at 35.8 percent, Consumers Mutual Insurance of Michigan at 20.5 percent and United Healthcare Community Plan at 14.7 percent.
Three insurers are countering the trend and dropping their rates in the coming year, according to the state.
Meridian Health Plan had the biggest decline with a 12.6 percent plunge, followed by Molina Health Care with a 8.6 percent decrease and Humana Medical Plan of Michigan with a 4.9 percent drop.
Michigan companies attributed their increases to higher-than-expected claim costs, annual health care cost increases and an expected reduction in federal program reinsurance recoveries, officials said.
The small increase in the small group market occurred because many companies experienced better than expected results that offset most of the change in annual health care costs.
“Ensuring rates are adequate but not excessive is critical to make sure consumers not only receive health insurance coverage at a reasonable price, but can count on the coverage they purchase,” McPharlin noted. “Michigan has a stable and competitive health insurance market with a range of options and premiums for consumers and businesses.”
Open enrollment for 2016 begins Nov. 1, 2015 and continues through Jan. 31, 2016. State officials are encouraging consumers to contact their insurance carrier, agent, or navigator about how the rate changes could affect their policies.